AL ESCOBAL

BSBA-1V-1
11-BBA-02

1. Who is Adam Smith?

2. What are his contribution to economics? Explain each.
3. Do you think he is worthy to be called "The Father of Economics".
4. Explain this:
"As soon as the land of any country has all become private property, the landlords, like all other
men, love to reap where they never sowed, and demand a rent even for its natural produce." -
Adam Smith

1. Who is Adam Smith?

-Adam Smith is the father of Modern Economics. Adam Smith is Scottish philosopher and
author whose probably best known for writing a book titled “An Inquiry Into the Nature and
Cause of Wealth of Nations”

2. What are his contribution to economics? Explain each.

I. "The Wealth of Nations," Adam Smith popularized many of the ideas that form the basis for
classical economics. Other economists built on Smith's work to solidify classical economic
theory, the dominant school of economic thought through the Great Depression. His work
discusses the evolution of human society from a hunter stage without property rights or fixed
residences to nomadic agriculture with shifting residences. The next stage is a feudal society
where laws and property rights are established to protect privileged classes. Finally, there is
modern society, characterized by laissez-faire or free markets where new institutions are
established to conduct market transactions
II. The philosophy of free markets emphasizes minimizing the role of government intervention and
taxation in the free markets. Although Smith advocated for a limited government, he did see the
government as responsible for the education and defense sectors of a country. From Smith
comes the idea of the "invisible hand" that guides the forces of supply and demand in an
economy. Every person, by looking out for themselves, inadvertently helps to create the best
outcome for all. By selling products that people want to buy, a hypothetical butcher, brewer, and
baker in this economy hope to make money. If they are effective in meeting the needs of their
customers, they will enjoy financial rewards, and while they are engaging in enterprise for the
purpose of earning money, they are also providing products that people want. Smith argued that
this kind of system creates wealth for the butcher, brewer, and baker, in addition to creating
wealth for the entire nation.

III. Assembly-Line Production Method

The ideas promoted by the "The Wealth of Nations" generated international attention and were
a motivating factor in the evolution from land-based wealth to wealth created by assembly-line
production methods made possible by the division of labor. Smith used the example of the labor
required to make a pin to illustrate the effectiveness of this method. If one person were to
undertake the 18 steps required to complete the tasks, they could only make a handful of pins
per week. However, if the 18 tasks were completed in assembly-line fashion by 10 individuals,
 production would jump to thousands of pins per week. Smith argues that the division of labor
and resulting specialization produces prosperity.

IV. Gross Domestic Product (GDP)

The ideas in "The Wealth of Nations," provided the genesis for the concept of gross domestic
product (GDP) and transformed the importing and exporting business. Prior to the publication of
the "The Wealth of Nations," countries declared their wealth based on the value of their gold
and silver deposits. However, Smith was highly critical of mercantilism; he argued that countries
should be evaluated based on their levels of production and commerce. This concept was the
basis for the creation of the GDP metric for measuring a nation's prosperity.

3. Do you think he is worthy to be called "The Father of Economics".

- Yes , Because of His single work—An Inquiry into the Nature and Causes of the Wealth of
Nations (1776), the first comprehensive system of political economy—he is more properly
regarded as a social philosopher whose economic writings constitute only the capstone to an
overarching view of political and social evolution.
4. . Explain this:
"As soon as the land of any country has all become private property, the landlords, like all other
men, love to reap where they never sowed, and demand a rent even for its natural produce." -
Adam Smith

For Me it means people sometimes want money for what they have got, If you want it, and that
property owners are in a great position because they have enough resource.
If someone wants you for your labor they pay for it, you don’t receive the fruits of your labor,
they do and you get paid. If someone wants the fruits of your labor they pay for it, they get it,
you have money.
The unimproved value of land is special because the owner didn’t make it but he still wants
payment for it